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Difficulty: MediumWages, Salaries, and Commissions

A retail boutique manager receives a fixed monthly salary of $3,200\$3,200. In addition to this base pay, she earns a 3%3\% commission on her own personal sales and a 0.5%0.5\% override commission on the sales generated by her staff. Last month, her personal sales totaled $14,000\$14,000, and her staff's sales totaled $38,000\$38,000. What was the manager's total gross income for the month?

  1. A
    $4,760
  2. B
    $610
  3. C
    $5,520
  4. $3,810Answer

Answer

$3,810\$3,810
To find the total gross income, calculate the separate commissions and add them to the base salary. The personal commission is 3%3\% of $14,000\$14,000 (which is $420\$420) and the staff commission is 0.5%0.5\% of $38,000\$38,000 (which is $190\$190). Adding these variable amounts to the fixed $3,200\$3,200 base salary yields a total of $3,810\$3,810.

Step-by-Step Solution

1
Calculate the commission earned from personal sales.
$14,000×0.03=$420\$14,000 \times 0.03 = \$420
The manager earns a 3% commission on her $14,000 of personal sales.
2
Calculate the override commission earned from staff sales.
$38,000×0.005=$190\$38,000 \times 0.005 = \$190
The manager earns a 0.5% commission on the $38,000 sold by her staff. Note that 0.5% is 0.005 in decimal form.
3
Add the base salary and both commission amounts to find the total gross income.
$3,200+$420+$190=$3,810\$3,200 + \$420 + \$190 = \$3,810
Gross income is the sum of all fixed pay and variable earnings before taxes.

Key Concept

Calculating Gross Pay with Base Salary and Multiple Commission Rates
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Topics

Wages, Salaries, and Commissions

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